Thursday, July 29, 2010

The news in that massive data dump provided by the dauntingly mysterious Wikileaks (who? what?) to one American and two European publications is that there is no news at all. We already knew that the war in Afghanistan was not going well. We already knew - or, in the words of The New York Times, "harbored strong suspicions" - that Pakistan's military spy service was aiding the Taliban (with friends like this ...) and we already knew that Afghanistan's army and police would be reformed and able to stand up to the Taliban sometime around when pigs fly or Washington balances the budget. No need to wait by the phone.

This leak has inevitably been compared to the Pentagon Papers, which were provided to the Times and, a bit later, The Washington Post in 1971. That secret history of the Vietnam War really was a secret. Not only were the documents themselves so labeled, but they revealed information that had been withheld from the American people, including the stunning fact that the administration of Lyndon Johnson was escalating the conflict while publicly pledging to "seek no wider war." Johnson's successor, Richard Nixon, did more of the same - expanding the war in an effort to bring North Vietnam to its knees and end the conflict. It only managed to expand the war to the streets of Washington.

Nothing in what Wikileaks provided approaches this sort of revelation of duplicity. It seems clear from the documents that the Taliban has used surface-to-air missiles, as the mujahedeen did against the Soviets, and while this is something we previously did not know, the missiles apparently have not yet materially affected the war. But even this revelation, as well as many of the others, comes from unverified ground reports and may turn out to have been produced by the renowned fog machine, usually present in combat. The Guardian, one of the newspapers favored by Wikileaks and a long-standing opponent of the war, cautioned that "some of the more lurid intelligence reports are of doubtful provenance."

Indeed, what would have been major news is if these documents supported any optimism. That would have been a stunning reversal of what is fast becoming conventional wisdom: The war in Afghanistan cannot be won as winning is now defined - defeat of the Taliban, eradication of al-Qaida and the preservation of a functioning central government run by someone like our close friend and cherished ally, Hamid Karzai. This is not going to happen.

In the July 26 Newsweek, Richard N. Haass, a former State Department official in both Bush presidencies and currently the chairman of the Council on Foreign Relations, outlines several possible alternatives, including what would amount to conceding a hunk of Afghanistan to the Taliban. Interestingly, the piece - written before Wikileaks did its leaking - mentions the Taliban-Pakistan relationship, which given Pakistan's preoccupation with India (adequately reciprocated, I must say) is the central concern of the region. Both nations are armed with nuclear weapons and ample amounts of enmity.

Along with the Wikileaks revelations, the most telling news story about Afghanistan also appeared in Monday's newspapers. It concerned the allegation that prisoners in a north Mexican jail were armed by officials and allowed out at night to commit murder. This, I emphasize, was Mexico, a Western nation, just across the Rio Grande, and yet we can hardly comprehend such levels of corruption - or, it seems, do very much about it. Yet, on the other side of the world, in an Eastern nation, tribal in character and so very, very poor, we undertake to turn its constabulary into some spiffy and efficient force and do the same with the army. The Wikileaks documents say - anecdotally but convincingly - that this is not happening. Again, this is something we already knew - anecdotally but convincingly.

The Obama administration will go through the motions of hunting down the leaker and denouncing the leaks, as it actually should. (Government is entitled to some secrets; it needs them to protect us.) But after taking a deep breath, it may conclude that Wikileaks has done it a favor - speaking the unspeakable, and not in the allegedly forked tongue of the mainstream media but in the actual words of combat soldiers. This will make the inevitable decision easier. Barack Obama, an unemotional man, will wind down the war in Afghanistan - not just because he wants to, but because he has to. This, like the news from Wikileaks, is not news at all.

WikiLeaks’ Julian Assange, previously famous for leaking a video of an American helicopter attack in Baghdad that killed several people (with a scene showing one of them carrying a rocket-propelled grenade edited out), is making headlines again — this time for his data dump of classified material about the war in Afghanistan. His supporters like to think of him as “an Internet freedom fighter.” Assange himself has collaborated with this image by making pious assertions about the value of “transparency” — of the sort WikiLeaks has produced — for reducing international corruption and creating better government. But Assange’s own profile, far from that of a conscientious moral critic bent on revealing unethical behavior, shows the evolution of an information vandal sublimely indifferent to those who might be put at risk by his behavior.Born in Australia in 1971, Assange grew up in an unanchored family which had moved 37 times by the time he was 14. His cheap teenage thrills involved invading the secure worlds that others created. By 1987, Assange had established a reputation as a sophisticated computer programmer who could break into even the most well-protected networks. But he indicated his real intentions by joining with two fellow hackers to form a group that became known as the International Subversives. They broke into computer systems from Europe to North America, including, most notably, networks belonging to the U.S. Defense Department and the Los Alamos National Laboratory. In a book to which he contributed – Underground: Tales of Hacking, Madness and Obsession on the Electronic Frontier – Assange tried to create an aura of morality around this activity, defining what he called the Golden Rules of the hacker subculture [1]: “Don’t damage computer systems you break into (including crashing them); don’t change the information in those systems (except for altering logs to cover your tracks); and share information.”Hacking remained an obsession for Assange throughout his late teens; the excitement he derived from it was only amplified by his knowledge that federal authorities were doggedly trying to catch him and his fellow “Subversives.” This self-dramatization continues today, as Assange constantly moves from place to place, maintaining no real home, because he fears that international governmental agencies, particularly those in the U.S., may have targeted him for reprisal for the leaks he has orchestrated.In September 1991, Assange hacked into the master terminal that the Canadian telecom company Nortel maintained in Melbourne. Soon thereafter, he was caught by federal investigators and was charged with 31 counts of hacking and related offenses. Facing a potential sentence of a decade behind bars, Assange pled guilty to 25 charges and 6 were dropped. At his final sentencing, the judge went easy on him: “There is just no evidence that there was anything other than sort of intelligent inquisitiveness and the pleasure of being able to—what’s the expression—surf through these various computers.” Thus Assange escaped with the lightest of penalties — the payment of a small fine.After the hacking trial, Assange lived below the radar in Melbourne for a number of years, working variously as a computer programmer and software developer, among other pursuits. He also studied physics and math at the University of Melbourne. Then, in 2006, he began the process of creating WikiLeaks, a website that would publish confidential government documents and images. His inspiration for this brainstorm was the infamous Daniel Ellsberg, who in 1971 — the year of Assange’s birth — had published the Pentagon Papers [1].Shortly after getting WikiLeaks off the ground, Assange flew to Kenya to attend the World Social Forum [1] — a yearly symposium dedicated to the redistribution of wealth and the eradication of capitalism — where he delivered a presentation about his new website.Steadfastly contending that his primary objective vis-à-vis WikiLeaks was to expose injustice wherever it might reside, Assange told [1] potential collaborators in 2006: “Our primary targets are those highly oppressive regimes in China, Russia and Central Eurasia, but we also expect to be of assistance to those in the West who wish to reveal illegal or immoral behavior in their own governments and corporations.” Assange also suggested [1] that a “social movement” to expose incriminating classified information had the potential to “bring down many administrations that rely on concealing reality—including the U.S. administration.” Indeed, it has been the U.S.—rather than Russia and China—that WikiLeaks has targeted.Recently, Assange posted military documents that included the Social Security numbers of American soldiers. While acknowledging that leaks like these could harm innocent people, he rationalized such possibilities as mere “collateral damage, if you will” and added airily that he could not be expected to calculate, in advance, the importance of every bit of information that might eventually find its way onto WikiLeaks.On another occasion, WikiLeaks published the results of an Army test which found that certain electromagnetic devices designed to prevent IED explosives from detonating, also tended to compromise the performance of communication systems used by American soldiers. When asked if he would consider not releasing this information, given its potential for being exploited by terrorists intent on killing U.S. troops, Assange replied lamely that in spite of his “harm-minimization policy,” his uncompromising commitment to transparency might ultimately cause him and his fellow WikiLeaks insiders to get “blood on our hands.”Assange has also published thousands of pages of secret military information detailing Army purchases in Iraq and Afghanistan; the Standard Operating Procedures manual for Camp Delta (in Guantánamo Bay); NATO’s secret plan for the Afghan war; and the contents of Sarah Palin’s private Yahoo account.With the release of 92,000 military field reports, Assange has now made a serious bid to equal what his imagined mentor Daniel Ellsberg accomplished in 1971. While there are actually few similarities between the Pentagon Papers (a detailed narrative of U.S. involvement in Vietnam that gave a wholly different view than the one offered by the war’s defenders in the White House) and the WikiLeak Papers (random documents), one common thread unites the two men associated with these leaks: Ellsberg intended to help our enemies defeat us 40 years ago, and Assange hopes to accomplish exactly the same thing today.

in overall, average tempertures. Again, this appears to be Earth’s normal, natural cycle, as is connected

to events in both our own Solar System, and most likely, events within our home Galaxy…

Nevertheless, it behooves all to ensure that we are well prepared to deal with this issue (or any emergency)

as that is the prudent and most logical step to take, given the current forecasts and circumstances.

Add to this, food shortages, federal government’s war on the American people, and other issues, in addition to the cold,

could be “heating up” issues related to our survival skills and preparedness = No pun intended…

The Universal wake-up call cannot get any louder…

Peace and Freedom to all – And, stay healthy, eat organic, and exercise; you will need

your strength and your wholesome, nourishing foods to survive.

God Bless, (See Below)

Arthur

Dr. E

Dir. of Operations and Research

Public Health, Medical Fraud, Investigations

also: Veteran, Casual Hero, Patriot

To: JackSubject: Hot Air

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Hot Air

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Warmers and Democrats are once again getting overheated by their own propaganda, claiming 2010 is the hottest year on record. It is getting so pathetically obvious that the mainstream media and those corporations and people behind them are lying to the public about global warming. The Climategate conspirators have all gone back to work as if nothing happened now that summer is here and it’s hot. They conveniently forget that there is a southern hemisphere where it is very cold right now, thinking to fool everyone with their lies.

Do they really expect us to believe them with this or anything ever again? The whole world will pay a price for the continued lies of the corporate-controlled media for we are not preparing for what is coming. Paul Krugman was crying on Sunday bemoaning the failure to pass global warming and CO2 taxation in the United States. Yes it has been hot in the north but its winter in the southern hemisphere where it is abnormally cold.

Yesterday the Peruvian government declared a state of emergency because of the cold wave gripping a number of districts in the nation’s 16 regions, according to an urgent decree published Saturday in the official gazette. The decree covers all districts of the country more than 3,000 meters (9,800 feet) above sea level, as well as three regions in the Peruvian jungle that have registered strangely low temperatures in the last few weeks. According to official figures, so far this year at least 409 people have died of pneumonia and ailments related to the cold weather, most of them younger than five years old (200 deaths) and over 60 years (158 deaths).

Los Angeles International Airport set a record low onFriday of only 67 degrees, breaking the previous recordset in 1926, according to the National Weather Service.

Here in Brazil in the southern city of Urupema, next to Argentina, temperatures dropped to a record minus 7.8° Celsius (17.96° Fahrenheit). In the south of Brazil and central Paraguay thousands of cattle have been reported dead, while in the south of Chile an agriculture emergency was declared and problems are occurring in Buenos Aires at the peak of the winter season. This July is a repetition of the 2007 July when it snowed in Buenos Aires for the first time since 1918. It snowed again yesterday. It even snowed in the province of Santiago del Estero where it has never snowed! “Today was the coldest day in 10 years in the entire country, in all places.”

At least 175 people have died in the coldestwinter in South America in recent years,officials in six affected countries said.

Perhaps too much attention and fame has gotten to Paul Krugman or perhaps he is just being paid off to say what others think the rest of us humans should know. He thinks that, “Every piece of valid evidence – long-term temperature averages that smooth out year-to-year fluctuations, Arctic sea ice volume, melting of glaciers, the ratio of record highs to record lows – points to a continuing, and quite possibly accelerating, rise in global temperatures.” Yes it’s hot and it’s July but there is more – not less – Arctic sea ice at the North Pole, and that’s in July.

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Listen to this very mainstream weatherman point to the pictures of the ice, which clearly show huge increases. In the delusions of their minds, Krugman, Al Gore and many others now believe that no matter how cold and how much ice is accumulating at both poles it’s getting warmer. See how easy it is to lie?

imageAlfred Wegener Institute Neumayer III Antarctic station

The Neumayer III station, operated by Germany’s Alfred Wegener Institute, has recorded the lowest temperature at their Antarctic location since the start of operations there 29 years ago. The mercury dropped to -50.2°C (-58.36°F).

An extreme cold snap has broken temperature records in New Zealand and produced what are likely to be the country’s coldest nights this year. The National Institute of Water and Atmospheric Research said the past few days had seen some of the lowest temperatures on record. Yes that’s global warming in some people’s book.

So convinced are the global warming mongrels that we even saw on Monday: “Global warming could drive millions more Mexicans into the United States in search of work by 2080 due to diminishing crop yields in Mexico.” One can almost laugh if this were not so tragically sad that some elite bunch of psychopaths have taken control of the media and are just passing one lie after another with that attitude that we are all stupid cattle who believe everything thing they say.

And if you have not noticed, my fellow cattle, they are ever more talking about war with Iran again. And sure, we are partially brain dead, exactly the way they want us, from drinking their fluoridated water and from all the mercury, a potent neurotoxin they attack us with in the dental office and in their vaccines. They also fail to tell us that the coal-fired electric power industry is putting out huge tonnages of mercury into the air, and that’s the real problem, not CO2.

Finally bursting into the full light of day are Chemtrails. Here in this picture we see extremely low altitude spraying in the Gulf. Now we finally know for sure that they are that crazy, sick and capable of doing the same in other areas for other reasons. Increased conspicuous jet fuel trails globally have been reason for concern, a satanically inspired scheme to create the hell on Earth now witnessed in the Gulf Coast region. But this particular hell is certified directly by the EPA as being a safe hell to breathe in. Do you believe them?

Welcome to planet earth where the weather has gone absolutely crazy but the general tendency is cooling, dryer, wetter and even hotter in some places. It’s raining so hard in places like Iowa that dams are breaking so perhaps it’s better if we wrap up our bedrolls and start moving in the direction of the gates of heaven because down here it has been and will be increasingly an inferno even if it becomes bitterly cold. That’s the plan after all; reduce the world population to 500,000 million fully poisoned people. The minds of the elite are so poisoned that they want to make sure the rest of us join them in their insanity.

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Dr. Stanley K. Monteith wrote, “It was not until I journeyed to Elberton, Georgia, stood within the dark shadows of the great Druid-like monument built there, and read the words engraved on the massive stone pillars of that structure that I finally came to accept the truth. At that point it became obvious that just as our Lord has given mankind Ten Commandments to guide our lives, so, too, those from ‘the dark side’ have been given their instructions from the ‘one’ they worship. The ten programs of the ‘guides’ are inscribed in eight different languages on the four great granite pillars of the American Stonehenge. That message foretells a terrifying future for humanity.”

It was 1763 during the French-Indian War. The Native Americans greatly outnumbered the British and were suspected of being on the side of the French. As an “act of good will” the British gave blankets to the Indians, but the blankets came from a hospital that was treating smallpox victims and consequently smallpox raged through the Native American community and devastated their numbers. In 2010 a British company saw fit to poison the Gulf of Mexico with two million gallons of Corexit without any inkling of what the toxic consequences would be. Should we be surprised?

Tuesday, July 27, 2010

Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

A significant feature of fiat money systems is the privilege for the custodian of the reserve currency to engage in regular practices of ham-fisted monetary management, even permission for fraudulent centers to flourish, surely developing a debt monster that an economy grows dependent upon. Fannie Mae might be the most offensive blight on such privilege. Unfortunately, many shenanigans have matured into grand fraud. They are smoking guns of USTreasury fraud and counterfeit, with strong whiffs of monetization. Much more monetization is to come, fully endorsed and sanctioned. Other clever techniques are being used, given the Quantitative Easing has officially been halted. A close look reveals that Excess Cash Reserves at the USFed are being drawn down, which are thus funding the USGovt deficits in the last couple months. Ironically, such reserves held by big banks at the US Federal Reserve were the only thing preventing vast insolvency. Now that cash is being used, and the USFed insolvency is slowly exposed. Details can be found in the July Hat Trick Letter reports. Evidence is compelling, and grand motive for foreign creditors to reject the USDollar, whose active control strings are traced to Wall Street. When recognized monetization destroys the last vestige of trust and confidence in the USDollar, when more official rounds of sponsored Quantitative Easing arrive, the USDollar will be on a downward spiral. In fact, all major currencies face the same prospect of vast monetary expansion. They will all fall sharply in value, and by counter-effect, the Gold price will rise powerfully.

CHINESE WARNING SHOTS ACROSS THE BOW

This story is a gem. The Chinese Dagong credit agency made an inaugural splash with a debt downgrade of the USTreasury Bonds. They called the US-based trio of debt rating agencies politically biased, an under-statement. The Dagong agency used its first splash into sovereign debt to establish a bold standard of creditworthiness around the world, giving much greater weight to wealth creating capacity and foreign reserves than Fitch, Standard & Poors, or Moodys. Dagong pays more attention to rapidly escalating debt levels. The Chinese Govt has coordinated their strategy, selling off short-term USTreasury Bills, but hangs onto a large raft of long-term USTreasury Bonds. On a net basis, the Chinese purchases have hit a plateau.

Meanwhile, with distracting commentary, China has doubled its gold holdings. At least the Chinese Govt has promised not to use their foreign reserves as a weapon. What a relief!! And Wall Street promises no more bond misrepresentation, no insider trading, no more fraud, no more drug money laundering (see Wachovia & Wells Fargo). What a relief!! The USGovt strives for clarity about management of China's $2.5 trillion in FOREX reserves, the world's largest. It contains $868 billion in USTreasurys at last count. The growing fear is that, in anger over trade friction, or in disgust over reckless USDollar management, or from a response to discovered hidden USTBond monetization, or with ambition to displace the US from its dominant post, China could dump USTreasury Bonds with a vengeance. The credit market analysts justifiably call it the Nuclear Option. The Beijing officials have given veiled warning to reduce the USGovt deficits and to put aside thoughts of another Quantitative Easing. The next QE2.0 comes as sure as night follows day. It comes with a heavy cost. The message is written on the wall, that the United States has forfeited its sovereignty with rampant debt production rather than industrial production.

USTREASURY ISSUANCE EXCEEDS USGOVT DEFICITS

This story is a gem. USTreasury bond issuance exceeds even the gargantuan USGovt deficits. The gap is $1.5 trillion over four years. One could guess that Wall Street is selling bonds and squirreling the money in foreign banks, a basic counterfeit in a syndicate operation. The operation might bring new meaning to monetization. At least a parallel exists. The majority of home mortgages have their income stream used in more than one mortgage bond. That is the real reason why home loan modification is a thin farce. The MERS database conceals the game, but the public has the satisfaction of knowing that MERS has no legal standing. The state courts are declaring no legal standing, and foreclosure procedures are blocked as a result. People cannot be removed from their homes when the database is used in handoffs of notes and titles.

Under Goldman Sachs rule, the USDept Treasury is running some bold kind of racket game, whose purpose is unclear, except it lacks legitimacy. The USGovt borrowing through debt issuance was $142 billion more than the June USGovt federal deficit, which means they are doing more than financing the deficit. The extra proceed funds are not accounted for. In chronic fashion, excess issuance has been the pattern, as the USGovt has issued $1.5 trillion more in debt securities than its budget deficit in the past four years. During the past 45 months, the USGovt has accumulated an incremental $4.7 trillion in new debt, but the federal budget deficit has grown by $3.2 trillion, much less but still a mammoth amount. Nobody asked why so, and nobody asks where the resulting funds from the bond sales go. One is left to speculate that a vast bold new syndicate technique is simply selling bonds beyond newly formed debt, seizing the funds in foreign locations for syndicate usage. The June USGovt official budget deficit was logged at $68.4 billion. During the same month, the USGovt borrowed a staggering total of $210.9 billion. These are not refinances of USTreasury debt in rollover. On a consistent basis, the USGovt has borrowed much more in each deficit month than was required to close the deficit and finance the debt accrued. The differential of excess debt issuance for the first six months of 2010 comes to a hefty $290 billion, a pattern in continuance.

Perhaps the Wall Street firms in control figure that with large numbers, nobody will notice, or given the hidden monetization, they might as well put the bond presses in hyper-drive. The cumulative data, as well as the mindboggling differential (dotted line) between the two series is shown on the attached chart. Perhaps it is for war funding far in excess of the stated costs, to save embarrassment and questions. Perhaps it is for enormous vertically integrated business investment in Afghanistan of clandestine type. Perhaps it is for the heavily rumored underground cities under construction for elite resident purposes. Perhaps it is extra costs for additional new military bases scattered across the globe. Perhaps the answer is simpler, in that it is just being counterfeited and stolen by the financial syndicate with impunity. This is a smoking gun.

ENGLAND BUYS $170B USTBONDS FROM SAVINGS ???

This story is a gem. The Chinese dump USTreasurys and England accumulates them. Or more accurately, the USFed hides its vast monetization efforts in the United Kingdom account ledger item. No way to the reasonable man can Britain purchase $170 billion in USTreasurys in five months from legitimate sources of savings!! In May 2010, China reduced their USTreasury holdings by $32.5 billion, now the lowest level since June 2009. China shed $35.4 billion in short-term USTBills, offset by a mere $2.9 billion in purchased USTBonds. Furthermore, Japan reduced holdings in USTBonds, as did the OPEC nations. However, buyers could be found, all Anglo descent, at least on the surface. The total foreign USTreasury holdings rose from $3957 billion to $3964 billion. Attribute the good tiding news to gigantic ongoing accumulation by England, just like the last several years. The UK-based buying is highly suspicious, like a group of homeless men walking out of a haberdasher shop wearing Brooks Brothers suits with bad hair and mismatched shoes, but arouses no attention except by intrepid analysis divorced from Wall Street or the USGovt. Generally, the United States financial system suffered a dramatic decline in May as foreign purchases of US assets hit a wall, falling from $110.3 billion to just $33 billion. See the graph of steady Chinese unloading of USTreasurys in the last several months.

As of end May, China still holds a gaggle of USTreasurys, but their USTBill holdings are down to a trifling $7 billion, as China sells into the confusion, especially at high principal prices tied to near 0% yields. China is selling the bubble. Without any question whatsoever, the USFed and USDept Treasury are using the United Kingdom as a ledger item for their mammoth USTreasury monetization, all barely hidden, with the TIC data used as a tiny fig leaf that offers inadequate coverage. The story receives no mainstream attention. The United Kingdom has wrecked banks, staggering deficits, no trade surplus, yet managed to buy a whopping $28 billion of USTBonds in just the month of May. Seems like Printing Pre$$ operations and London serving as the Hidey Hole. At end 2009, as of the December tally, the UK owned $180.3B in USTBonds, yet somehow managed to accumulate in the new year, up to the current $350.0B. THE UK SUPPOSEDLY HAS ALMOST DOUBLED THEIR HOLDINGS IN A MERE FIVE MONTHS!!

Bear witness to the shadow USFed debt monetization operation, operating out of the United Kingdom, or at least its accounting. The hidden USTreasury Bonds reside in England, home of the master to US bankers. Anyone who accepts the following graph on its face is foolish, compromised, or politically motivated to the extreme.

Bear in mind that we are talking about crippled England here, or the United Kingdom more generally. The UKGovt just announced spending cuts to reach 40% of budget, not the previous 20%. Britain could not cope with an extended episode in the credit crisis, according to the Bank For Intl Settlements. Yet this nation gobbled up $170 billion in USTreasurys from ripe savings in five months?? Hardly. The Bank For Intl Settlements has warned that sovereign debt under siege cannot adequate be relied upon as the coupon for broad national financial rescue and stimulus, not again, not in the next round. The UKGovt is admitting openly that the situation is worse than they said before. Newly ordained Prime Minister David Cameron ordered the officials to draw up 40% cuts, the biggest in history. He has ordered cabinet ministers to draw up a Doomsday budget whose essential service spending cuts could see tens of thousands given pink slips. Yet this nation gobbled up $170 billion in USTreasurys from ripe savings in five months?? Hardly. This is a smoking gun.

In the summer 2008 leading up the the Wall Street death experience, the British suffered their own shameful episode with Northern Rock, Royal Bank of Scotland, even the venerable Lloyds of London each succumbing, no longer breathing life in a solvent sense. They are equally broken and insolvent as the biggest US banks. Billions of pounds were spent in nationalizing the Royal Bank of Scotland (partial), Lloyds Banking Group (partial), and Northern Rock (total) in an attempt to prevent their collapse. Neither the UK nor the US is on any path of reform or restructure. London redeemed failure from a real estate bust, which is the absolute opposite of investment or stimulus. Yet this nation gobbled up $170 billion in USTreasurys from ripe savings in five months?? Hardly. This is a smoking gun.

USGOVT HIDEY HOLE IN "HOUSEHOLD" CATCH-ALL

This story is a gem. Eric Sprott of Sprott Asset Mgmt casts a suspicious eye at the USTreasurys for the so-called Household category in their accounting. It is a blatant ledger item for illicit monetization, a veritable crime scene without the cordoned zone and yellow tape. Sprott directs his accusations like a skilled prosecutor. He reinforces the claim of Ponzi Scheme cited by Bill Gross of PIMCO. Sprott calls the solution to finance the mammoth USGovt deficits to be the actual problem, namely hidden monetization. The Hat Trick Letter is in perfect sync with his line of reasoning and accusation, as the "Household" accounting ledger item is the culprit. This item has been the topic of past Jackass focus and analysis. Data in gory detail is offered in his indictment. Sprott points out that in order to balance the budget for fiscal 2009, the USGovt needed to sell $2041 billion in new debt, equal to three times the new debt that was issued in fiscal 2008. Witness the grand rampup without identified sources of buyers, mythical buyers in official USTreasury auctions, fraudulent accounting on the official books. No purchasing groups could could afford to increase their 2009 USTreasury purchases by 200%, a simple conclusion. So by process of elimination, the monetization source arises most visibly, but he shows where it appears in the accounting.

In the latest USDept Treasury Bulletin published in December 2009, ownership data reveals that the United States increased the public debt by $1.885 trillion dollars in fiscal 2009. That much is clear. According to this report, there were three distinct groups that increased their purchases from 2008 levels. The first was "Foreign & International Buyers" which purchased $697.5 billion worth of USTreasury securities in fiscal 2009, a 23% rise from fiscal 2008. The second group was the US Federal Reserve itself. Their published balance sheet reveals an increase in its USTreasury holdings by $286 billion in 2009, a 60% annual rise. Consider that jump to be a direct result of the official USFed Quantitative Easing program announced in March 2009. Quick summaries cover the other groups. Q1, Q2, and Q3 data from 2009 suggests that the State & Local Govts and US Savings Bonds groups were net sellers of USTreasurys in 2009. Then the pension funds, insurance companies, and depository institutions increased their purchases by only a paltry amount. The remainder was purchased by a category called loosely "Other Investors" as a catch-all. This other group purchased $90 billion in 2008, but then turned up into hyper-drive its purchases to $510.1 billion of freshly minted USTreasury securities so far in the first three quarters of fiscal 2009. On an annualized rate of purchase, the catch-all category is on pace to buy $680 billion of USTreasurys this year, over seven times the 2008 level. So the murky vague "Other Investors" saved the day and financed a gargantuan amount of the USGovt deficit.

Go to the source. The USDept Treasury Bulletin identifies "Other Investors" as consisting of Individuals, Government Sponsored Enterprises (GSE, as in Fannie Mae & Freddie Mac et al), Brokers & Dealers (who sell as intermediaries), Bank Personal Trusts & Estates, Corporate & Non-Corporate Businesses, Individuals, and Other Investors. It is far-fetched to believe parties in these groups had $700 spare billion to invest in the USTreasury market in fiscal 2009. Sprott dug deeper, and found the source in the data. The Federal Reserve Board of Governors Flow of Funds Data provides a detailed breakdown of the owners of USTreasury securities to 3Q2009. Within these parties, the GSE group acted as small buyers of a mere $5 billion this year. Brokers & Dealers were sellers of $80 billion. Commercial Banks were buyers of $80 billion. Corporate & Non-Corporate Businesses collectively were buyers of $11.6 billion. Add these cited parties to arrive at a net purchase of only $16.6 billion. The huge increase of purchases in 2009 came solely from one source within the "Other Investors" group.

The Federal Reserve Flow of Funds Report defines the infamous "Household Sector" which is a grab bag catch-all miscellaneous ledger item. The Hat Trick Letter has honed in on this corrupted ledger item in past reports. This category supposedly purchased $15 billion worth of USTreasurys in 2008, then jumped with ink jet assist (printing press) in 3Q2009 to a staggering $528.7 billion in purchases, a 35-fold increase. The Household is on track to buy $704 billion worth in all fiscal 2009. The bottom line is a shocker! What is the Household Sector? It is a combination of miscellaneous, ledger adjustments, and blatant monetization. Sprott calls it a PHANTOM that does not exist, but serves the purpose to balance the ledger in the US Federal Reserve Flow of Funds report. In the past, this ledger item was calculated as residuals, securities on loan across groups, even inclusive of rounding error. The monetization is no longer hidden. He concludes that USTreasurys have become one giant Ponzi scheme, just like Bill Gross of PIMCO quipped. This is a smoking gun.

BY THE END OCTOBER 2009, THE "HOUSEHOLD" ACCOUNTING CATEGORY OWNED MORE USTREASURYS THAN THE US FEDERAL RESERVE ITSELF. THAT IS CORRECT. MONETIZED USTREASURY BONDS ACCOUNT FOR MORE THAN WHAT THE USFED HOLDS. THE USTBONDS ARE HIDING IN ENGLAND.

Sprott summarized the bulk buyers of the $1885 billion in USTreasurys through Q3 of 2009:

Foreign USTBond holders share their worry openly. Zhu Min is deputy governor of the Peoples Bank of China. In a recent discussion on the global role of the USDollar, he told an academic audience that "The world does not have so much money to buy more USTreasurys. The United States cannot force foreign governments to increase their holdings of Treasuries… Double the holdings? It is definitely impossible." With foreign sources unwilling or unable to support USGovt debt, the monetization card will be used repeatedly and powerfully inside the desperate US-UK quarters. When the process is more widely recognized and publicized, the USDollar will be denigrated further, and rejected as quickly as any reasonable alternative can be produced by consensus. It is that simple. Worse, a viable alternative might be put forward with powerful force, enough to break any resistance from inertia or threadbare obstructions.

IMPLICATIONS TO THE USDOLLAR & GOLD

No creditor nation whose leaders are in their right mind would continue to support the USDollar as the global reserve currency when its debt securities are the object of such open fraud and high volume monetization. The USFed Chairman Bernanke before the USCongress testified that the USTreasury is not buying its own debt with printed money. His denial was a lie. He cannot identify the USTBond buyers. The evidence is compelling, and all around us. One does not have to be an advanced financial engineer to detect the trails of the monetized debt, its accounting location at the Household slot within the USGovt and within the United Kingdom in the Treasury Investment Capital (TIC) Report. The USGovt is racking up gigantic deficits, which will run in the neighborhood of $1.5 trillion annually for some time. The second half recovery claim is for the simple-minded. Austerity measures are a pipedream. Reform is nowhere. Confusion is everywhere. Economic recovery is a mirage.

Recent condescension from Kartik Athreya of the Richmond Fed toward economist critique was particularly offensive and disgusting. One does not need advanced economics degrees to detect grand malfeasance like described in this article, and utter failure of policy directions. Trained and decorated economists in the United States have very little to show for their erudite prose, abstruse doctrinaire, and affluent effluence. They have given wreckage to the USEconomy and insolvency to its financial foundation, as the cancerous outcome to their arrogant financial engineering and complex money & banking charts. An advanced statistics degree totally overwhems an advanced economics degree any day of the week. We make tools to fine tune a business, as our resumes overflow with successful stories.

Blown opportunities, wasted bailouts, and lack of solutions like reform & restructure assure a much high gold price. Actually, they assure much lower currency valuations. With the redemption of Wall Street bond failure in October 2008 (see TARP Funds), and the nationalization of failed firms (see Fannie Mae, AIG), and the vacant economic stimulus that served little more than state budget shortfall plugs, the potential for a $2000 gold price was provided. Over $2 trillion was wasted. Debt across the debt-plagued landscape will be monetized. That is a fanciful way of saying newly printed money will be used to buy the wrecked debt, so that it can be shoved under the carpet. The growing lump under the carpet is not a piece of furniture, but rather a fashion cancer. With the redemption of British bond failure in 2008, and the nationalization of failed firms, the potential for a $2000 gold price was reinforced from the Anglo flank. Over one trillion British Pounds were wasted. Debt across the debt-plagued landscape will be monetized. With the redemption of European sovereign debt in May 2010, and the absence of stimulus in the European Economy, the potential for $3000 gold price was provided. Almost $800 billion was wasted. Debt across the debt-plagued landscape will be monetized. Gold thrives when the major currencies are debased, debauched, and destroyed.

The winds are showing strong signals of another powerful round of Quantitative Easing, the so-called QE2. When announced formally, or incontrovertibly detected, the potential for a $5000 gold price will be provided. The USEconomy is moribund, and the EU Economy is moribund. Economic stimulus and monetary accommodations have ended in the United States. The deceptive cry of a second half recovery is met by the arrival of a second half deep swoon. November elections are coming in the United States, when liberal policy, free spending, and reckless decisions are normally made. Numerous smart analysts like Eric Sprott, Jim Grant, Jim Rickards, and Porter Stansberry expect the QE2.0 to set sail soon, a second shameful voyage, maybe announced this calendar year. Some analysts believe another financial market crisis episode will be permitted first, in order to permit an easy political path for the next round of Quantitative Easing. The QE2.0 is assured, not even worthy of a forecast. My forecast is for QE3.0 to be announced by early 2012, and for QE4.0 to be announced in 2013. The reason is simple. Absolutely no effort is being made to fix anything. Vast sums of newly printed money are being thrown at a problem without much thought or planning, while many new rules actually freeze businesses. The prevailing objective is to preserve power, but at a cost of devaluating all major currencies with a flood of money supply.

Banks still hold tons of toxic debt, as mortgage debt has been written down by $270 billion but residential housing alone has come down $7 trillion in value. Even the SEC head Shapiro admitted that a slew of bank failures is coming soon. Restructure of the USEconomy is not even a topic, as consumption is desired, not seen, as job growth is desired, not seen. Capital formation and job creation are no longer an understood concept within the tarnished marble halls of US economist offices. Return of the US industrial base is not even discussed, a lost bastion. Instead, the priority of banking and political leadership is preservation of power, in order to control the coveted USDollar Printing Pre$$.

The entire world is working overtime behind conference doors to fashion a new global reserve currency. The IMF Special Drawing Rights vehicle is openly discussed, more like a Straw Man. The New Nordic Euro is a promising initiative conducted in secrecy, to be constructed with a gold component. By design, it is to enable a return to monetary system stability. However, by design it is also a USDollar killer. Its arrival will come without any doubt. When it does, the talk will not be about a skein of distracting topics. Talk will be about hyper-inflation and the United States facing a Third World prospect. Talk will be about $5000 gold. Talk will be about nothing fixed by the stewards in charge. Let's hope by then, that some form of justice is introduced into the unfolding chapters of an American Tragedy.

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 24 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com . For personal questions about subscriptions, contact him at JimWillieCB@aol.com

On Sunday, The New York Times and two other newspapers published summaries and excerpts of tens of thousands of documents leaked to a website known as WikiLeaks. The documents comprise a vast array of material concerning the war in Afghanistan. They range from tactical reports from small unit operations to broader strategic analyses of politico-military relations between the United States and Pakistan. It appears to be an extraordinary collection.Related special topic page

* The War in Afghanistan

Tactical intelligence on firefights is intermingled with reports on confrontations between senior U.S. and Pakistani officials in which lists of Pakistani operatives in Afghanistan are handed over to the Pakistanis. Reports on the use of surface-to-air missiles by militants in Afghanistan are intermingled with reports on the activities of former Pakistani intelligence chief Lt. Gen. Hamid Gul, who reportedly continues to liaise with the Afghan Taliban in an informal capacity.The WikiLeaks

At first glance, it is difficult to imagine a single database in which such a diverse range of intelligence was stored, or the existence of a single individual cleared to see such diverse intelligence stored across multiple databases and able to collect, collate and transmit the intelligence without detection. Intriguingly, all of what has been released so far has been not-so-sensitive material rated secret or below. The Times reports that Gul’s name appears all over the documents, yet very few documents have been released in the current batch, and it is very hard to imagine intelligence on Gul and his organization, the Inter-Services Intelligence (ISI) directorate, being classified as only secret. So, this was either low-grade material hyped by the media, or there is material reviewed by the selected newspapers but not yet made public. Still, what was released and what the Times discussed is consistent with what most thought was happening in Afghanistan.

The obvious comparison is to the Pentagon Papers, commissioned by the Defense Department to gather lessons from the Vietnam War and leaked by Daniel Ellsberg to the Times during the Nixon administration. Many people worked on the Pentagon Papers, each of whom was focused on part of it and few of whom would have had access to all of it.

Ellsberg did not give the Times the supporting documentation; he gave it the finished product. By contrast, in the WikiLeaks case, someone managed to access a lot of information that would seem to have been contained in many different places. If this was an unauthorized leak, then it had to have involved a massive failure in security. Certainly, the culprit should be known by now and his arrest should have been announced. And certainly, the gathering of such diverse material in one place accessible to one or even a few people who could move it without detection is odd.

Like the Pentagon Papers, the WikiLeaks (as I will call them) elicited a great deal of feigned surprise, not real surprise. Apart from the charge that the Johnson administration contrived the Gulf of Tonkin incident, much of what the Pentagon Papers contained was generally known. Most striking about the Pentagon Papers was not how much surprising material they contained, but how little. Certainly, they contradicted the official line on the war, but there were few, including supporters of the war, who were buying the official line anyway.

In the case of the WikiLeaks, what is revealed also is not far from what most people believed, although they provide enormous detail. Nor is it that far from what government and military officials are saying about the war. No one is saying the war is going well, though some say that given time it might go better.

The view of the Taliban as a capable fighting force is, of course, widespread. If they weren’t a capable fighting force, then the United States would not be having so much trouble defeating them. The WikiLeaks seem to contain two strategically significant claims, however. The first is that the Taliban is a more sophisticated fighting force than has been generally believed. An example is the claim that Taliban fighters have used man-portable air defense systems (MANPADS) against U.S. aircraft. This claim matters in a number of ways. First, it indicates that the Taliban are using technologies similar to those used against the Soviets. Second, it raises the question of where the Taliban are getting them — they certainly don’t manufacture MANPADS themselves.

If they have obtained advanced technologies, this would have significance on the battlefield. For example, if reasonably modern MANPADS were to be deployed in numbers, the use of American airpower would either need to be further constrained or higher attrition rates accepted. Thus far, only first- and second-generation MANPADS without Infrared Counter-Countermeasures (which are more dangerous) appear to have been encountered, and not with decisive or prohibitive effectiveness. But in any event, this doesn’t change the fundamental character of the war.Supply Lines and Sanctuaries

What it does raise is the question of supply lines and sanctuaries. The most important charge contained in the leaks is about Pakistan. The WikiLeaks contain documents that charge that the Pakistanis are providing both supplies and sanctuary to Taliban fighters while objecting to American forces entering Pakistan to clean out the sanctuaries and are unwilling or unable to carry out that operation by themselves (as they have continued to do in North Waziristan).

Just as important, the documents charge that the ISI has continued to maintain liaison and support for the Taliban in spite of claims by the Pakistani government that pro-Taliban officers had been cleaned out of the ISI years ago. The document charges that Gul, the director-general of the ISI from 1987 to 1989, still operates in Pakistan, informally serving the ISI and helping give the ISI plausible deniability.

Though startling, the charge that Islamabad is protecting and sustaining forces fighting and killing Americans is not a new one. When the United States halted operations in Afghanistan after the defeat of the Soviets in 1989, U.S. policy was to turn over operations in Afghanistan to Pakistan. U.S. strategy was to use Islamist militants to fight the Soviets and to use Pakistani liaisons through the ISI to supply and coordinate with them. When the Soviets and Americans left Afghanistan, the ISI struggled to install a government composed of its allies until the Taliban took over Kabul in 1996. The ISI’s relationship with the Taliban — which in many ways are the heirs to the anti-Soviet mujahideen — is widely known. In my book, “America’s Secret War,” I discussed both this issue and the role of Gul. These documents claim that this relationship remains intact. Apart from Pakistani denials, U.S. officials and military officers frequently made this charge off the record, and on the record occasionally. The leaks on this score are interesting, but they will shock only those who didn’t pay attention or who want to be shocked.

Let’s step back and consider the conflict dispassionately. The United States forced the Taliban from power. It never defeated the Taliban nor did it make a serious effort to do so, as that would require massive resources the United States doesn’t have. Afghanistan is a secondary issue for the United States, especially since al Qaeda has established bases in a number of other countries, particularly Pakistan, making the occupation of Afghanistan irrelevant to fighting al Qaeda.

For Pakistan, however, Afghanistan is an area of fundamental strategic interest. The region’s main ethnic group, the Pashtun, stretch across the Afghan-Pakistani border. Moreover, were a hostile force present in Afghanistan, as one was during the Soviet occupation, Pakistan would face threats in the west as well as the challenge posed by India in the east. For Pakistan, an Afghanistan under Pakistani influence or at least a benign Afghanistan is a matter of overriding strategic importance.

WikiLeaks and the Afghan War(click here to enlarge image)

It is therefore irrational to expect the Pakistanis to halt collaboration with the force that they expect to be a major part of the government of Afghanistan when the United States leaves. The Pakistanis never expected the United States to maintain a presence in Afghanistan permanently. They understood that Afghanistan was a means toward an end, and not an end in itself. They understood this under George W. Bush. They understand it even more clearly under Barack Obama, who made withdrawal a policy goal.

Given that they don’t expect the Taliban to be defeated, and given that they are not interested in chaos in Afghanistan, it follows that they will maintain close relations with and support for the Taliban. Given that the United States is powerful and is Pakistan’s only lever against India, the Pakistanis will not make this their public policy, however. The United States has thus created a situation in which the only rational policy for Pakistan is two-tiered, consisting of overt opposition to the Taliban and covert support for the Taliban.

This is duplicitous only if you close your eyes to the Pakistani reality, which the Americans never did. There was ample evidence, as the WikiLeaks show, of covert ISI ties to the Taliban. The Americans knew they couldn’t break those ties. They settled for what support Pakistan could give them while constantly pressing them harder and harder until genuine fears in Washington emerged that Pakistan could destabilize altogether. Since a stable Pakistan is more important to the United States than a victory in Afghanistan — which it wasn’t going to get anyway — the United States released pressure and increased aid. If Pakistan collapsed, then India would be the sole regional power, not something the United States wants.

The WikiLeaks seem to show that like sausage-making, one should never look too closely at how wars are fought, particularly coalition warfare. Even the strongest alliances, such as that between the United States and the United Kingdom in World War II, are fraught with deceit and dissension. London was fighting to save its empire, an end Washington was hostile to; much intrigue ensued. The U.S.-Pakistani alliance is not nearly as trusting. The United States is fighting to deny al Qaeda a base in Afghanistan while Pakistan is fighting to secure its western frontier and its internal stability. These are very different ends that have very different levels of urgency.

The WikiLeaks portray a war in which the United States has a vastly insufficient force on the ground that is fighting a capable and dedicated enemy who isn’t going anywhere. The Taliban know that they win just by not being defeated, and they know that they won’t be defeated. The Americans are leaving, meaning the Taliban need only wait and prepare.

The Pakistanis also know that the Americans are leaving and that the Taliban or a coalition including the Taliban will be in charge of Afghanistan when the Americans leave. They will make certain that they maintain good relations with the Taliban. They will deny that they are doing this because they want no impediments to a good relationship with the United States before or after it leaves Afghanistan. They need a patron to secure their interests against India. Since the United States wants neither an India outside a balance of power nor China taking the role of Pakistan’s patron, it follows that the risk the United States will bear grudges is small. And given that, the Pakistanis can live with Washington knowing that one Pakistani hand is helping the Americans while another helps the Taliban. Power, interest and reality define the relations between nations, and different factions inside nations frequently have different agendas and work against each other.

The WikiLeaks, from what we have seen so far, detail power, interest and reality as we have known it. They do not reveal a new reality. Much will be made about the shocking truth that has been shown, which, as mentioned above, shocks only those who wish to be shocked. The Afghan war is about an insufficient American and allied force fighting a capable enemy on its home ground and a Pakistan positioning itself for the inevitable outcome. The WikiLeaks contain all the details.

We are left with the mystery of who compiled all of these documents and who had access to them with enough time and facilities to transmit them to the outside world in a blatant and sustained breach of protocol. The image we have is of an unidentified individual or small group working to get a “shocking truth” out to the public, only the truth is not shocking — it is what was known all along in excruciating detail. Who would want to detail a truth that is already known, with access to all this documentation and the ability to transmit it unimpeded? Whoever it proves to have been has just made the most powerful case yet for withdrawal from Afghanistan sooner rather than later.

Sunday, July 25, 2010

Three news features appearing earlier this week highlight tensions between the United States and the People's Republic of China that, at least in relation to the language used to describe them, would have seemed unimaginable even a few months ago and are evocative more of the Korean War era than of any time since the entente cordiale initiated by the Richard Nixon-Mao Zedong meeting in Beijing in 1972.

To indicate the seriousness of the matter, the stories are from Global Times, a daily newspaper published in conjunction with the People's Daily, official press organ of the ruling Communist Party of China, and Time, preeminent American weekly news magazine. Both accounts use as their point of departure and source of key information a July 4 report in Hong Kong's major English-language daily.

On July 6 writer Li Jing penned a news article for Global Times called "US subs reach Asian ports: report," which detailed the following recent developments:"Three of the largest submarines of the US Seventh Fleet surfaced in Asia-Pacific ports last week, the South China Morning Post reported Monday [July 5].

The appearance of the USS Michigan in Pusan, South Korea, the USS Ohio in Subic Bay, the Philippines, and the USS Florida in the strategic Indian Ocean outpost of Diego Garcia was a show of force not seen since the end of the Cold War, the paper said, adding that the position of those three ports looks like a siege of China." [1]The piece from the Hong Kong newspaper cited was entitled "US submarines emerge in show of military might: Message unlikely to be lost on Beijing as 3 vessels turn up in Asian ports," and was in fact dated July 4.

The author, South China Morning Post Asia correspondent Greg Torode, described the simultaneous arrival of three, "Ohio-class submarines" equipped with "a vast quantity of Tomahawk cruise missiles" as a reflection of "the trend of escalating submarine activity in East Asia..." [2]He further added this noteworthy data: "Between them, the three submarines can carry 462 Tomahawks, boosting by an estimated 60 per cent-plus the potential Tomahawk strike force of the entire Japanese-based Seventh Fleet - the core projection of US military power in East Asia."The author quotes without identifying his name or nation a veteran Asian military attaché with reported close ties to both Chinese and U.S. military officials:"460-odd Tomahawks is a huge amount of potential firepower in anybody's language.

"It is another sign that the US is determined to not just maintain its military dominance in Asia, but to be seen doing so...that is a message for Beijing and for everybody else, whether you are a US ally or a nation sitting on the fence." [3]On July 8 Time magazine's Mark Thompson elaborated on the earlier report with language, including that of his title, "U.S. Missiles Deployed Near China Send a Message," derived from the South China Morning Post piece, which Thompson claims contained information planted by "U.S. officials...on July 4, no less" [4] in a clear signal to the government in mainland China.The Time journalist added details, though, not in the original story, replete with a good deal of editorializing that perhaps serves the same source he attributes the contents of the Hong Kong article to and for the same reason: As a shot across the bow to China.

His account of last week's deployments included: "A new class of U.S. superweapon had suddenly surfaced nearby. It was an Ohio-class submarine, which for decades carried only nuclear missiles targeted against the Soviet Union, and then Russia."The U.S. has eighteen nuclear-powered Ohio class ballistic missile submarines, fourteen still armed with nuclear warhead-tipped Trident missiles and four which, "hold up to 154 Tomahawk cruise missiles each, capable of hitting anything within 1,000 miles with non-nuclear warheads."

"The 14 Trident-carrying subs are useful in the unlikely event of a nuclear Armageddon, and Russia remains their prime target. But the Tomahawk-outfitted quartet carries a weapon that the U.S. military has used repeatedly against targets in Afghanistan, Bosnia, Iraq and Sudan." [5]With the arrival of the USS Ohio in the Philippines, the USS Michigan in South Korea and the USS Florida, "in the strategic Indian Ocean outpost of Diego Garcia" [6] on the same day, "the Chinese military awoke to find as many as 462 new Tomahawks deployed by the U.S. in its neighborhood." [7]The Time report also revealed that all four Ohio class Tomahawk-armed submarines were operationally deployed away from their home ports for the first time.

Thompson wrote that the coordinated actions were, "part of a policy by the U.S. government to shift firepower from the Atlantic to the Pacific theater, which Washington sees as the military focus of the 21st century."Regarding the submarines still carrying Trident missiles, he rhetorically added, "Why 14 subs, as well as bombers and land-based missiles carrying nuclear weapons, are still required to deal with the Russian threat is a topic for another day." [8]All three journalists cited - Jing, Torode and Thompson - place the U.S. submarine deployments within a broader and also a more pressing context.

The South China Morning Post writer stated: "In policies drafted under then-president George W. Bush, a Republican, and continued by the administration of his successor, Democrat Barack Obama, the Pentagon is shifting 60 per cent of its 53 fast-attack [as distinct from ballistic and guided missile] submarines to the Pacific - a process that is now virtually complete.

"But the presence of the larger cruise-missile submarines shows that, at times, the US forward posture will be significantly larger."The USS Ohio, for example, "has been operating out of Guam for most of the last year, taking advantage of the island's expanding facilities to extend its operations in the western Pacific.

"It is due to return soon, but the Florida and the Michigan are likely to remain in the region for many months yet, using Guam and possibly Diego Garcia for essential maintenance and crew changes."Additionally, "The presence of the Florida, based on the US east coast, appears to confirm the US is still routinely bringing submarines under the arctic ice cap to East Asia." [9]Just as the Pentagon is moving nuclear submarines under the northern polar ice cap to the Indian Ocean, so it has recently reached an, "agreement [that] will allow troops to fly directly from the United States over the North Pole" to Afghanistan and "the region" by way of Kazakhstan, which borders China as well as Russia. [10]The U.S. military "siege of China" is proceeding on several fronts, on land as well as under water and in Central as well as South and East Asia.

But what primarily had been a policy of surveillance and probing China's perimeter is now entering a new phase. That the U.S. currently has over 60 per cent of the Tomahawk cruise missiles assigned to its Japan-based Seventh Fleet near China emphasizes the qualitative escalation of Washington's show of strength vis-a-vis Beijing.

One related to, as was seen above, a strategic shift of attack submarines nearer China and also to the crisis on the Korean Peninsula that was exacerbated by the sinking of a South Korean warship, the Cheonan, in March.

There has even been speculation that U.S. submarine deployments and other "messages" delivered to China of late were designed to pressure Beijing into taking a tougher stance toward North Korea over the Cheonan incident. What journalists have been referring to as messages would in an earlier age have been called saber-rattling and gunboat diplomacy.

U.S.-China relations sharply deteriorated this January when the Obama administration finalized an almost $6.5 billion arms sales package for Taiwan which includes 200 Patriot missiles. [11]

An article on the subject in the New York Times on January 31 was titled, revealing enough, "U.S. Arms for Taiwan Send Beijing a Message."China suspended military ties with the U.S., and bad blood has persisted throughout the year, resulting in Secretary of Defense Robert Gates scrapping plans to visit Beijing early last month when he was effectively disinvited by Chinese officialdom on the prompting of the military.

The White House and the Pentagon have been sending a number of unequivocal - and increasingly provocative - messages to China this year. The new U.S. administration signaled a confrontational approach early on.

In May of 2009 Secretary of State Hillary Clinton, barely three months in her post, stated, “The Obama administration is working to improve deteriorating U.S. relations with a number of Latin American nations to counter growing Iranian, Chinese and Russian influence in the Western Hemisphere...” [12]Later in the year then Director of National Intelligence (and retired admiral and former commander-in-chief of the Pacific Command) Dennis Blair released the latest quadrennial National Intelligence Strategy report which said, “Russia, China, Iran, and North Korea pose the greatest challenges to the United States’ national interests." [13]While Blair headed up the Pacific Command (PACOM) from 1999-2002, his role included overseeing a vast area of the planet that includes China (since the Ronald Reagan administration assigned it to that military command in 1983).

Arrogating the right to divide the entire world into military zones, areas of operation, has never been attempted by any other nation, any group of nations, not even all the nations of the world collectively (in the United Nations or otherwise). But the U.S. has and does do just that. It has even added two new Unified Combatant Commands - Northern Command and Africa Command - in recent years, in 2002 and 2007 respectively.

The Pacific Command is the oldest and largest of the six current regional commands (the others being the Africa, Northern, European, Central and Southern Commands), and was formed during the dawning of the Cold War in 1947. Its area of responsibility takes in over 50 per cent of the world - 105 million square miles - 36 nations and almost 60 per cent of the world's population.

300,000 troops from all major branches of the U.S. armed forces - the Air Force, Army, Marine Corps and Navy - are assigned to it, 20 per cent of all active duty American service members.

Pacific Command is in charge of military defense treaties with Australia, Japan, New Zealand, the Philippines and South Korea.

The U.S. is also alone in assigning the world's oceans and seas to naval commands. Washington has six naval fleets - the Fourth Fleet (the Caribbean, Central and South America) was reactivated in 2008 after being disbanded in 1950) - and just as Pacific Command is the largest unified, multi-service command, so the Seventh is the largest forward-deployed fleet, with 50-60 warships, 350 aircraft and as many as 60,000 Sailors and Marines at any given time.

It is based in Japan and its area of responsibility includes over 50 million square miles of the (largely western) Pacific and Indian Oceans.

The U.S. also has eleven aircraft carriers, ten of them nuclear-powered and all eleven part of strike groups. [14] (China has no and Russia one carrier.)

The Time magazine article quoted from earlier mentioned that the deployment of four U.S. guided missile submarines to East Asia and the Indian Ocean is not the only development that China needs to be concerned about. The U.S. is simultaneously presiding over six-week biennial Rim of the Pacific (RIMPAC) military exercises in Hawaii with over 20,000 troops, 36 warships and submarines (25 American) and 180 planes and helicopters.

This year's RIMPAC, which began on June 23 and is to be completed by the end of July, includes for the first time the participation of France, Colombia - with which the U.S. has recently concluded an agreement for the use of seven of its military bases [15] - and the Southeast Asia nations of Malaysia and Singapore.

The other countries involved are:• Australia• Canada• Chile• Indonesia• Japan• the Netherlands• Peru• South Korea • ThailandThe five-week war games involve "missile exercises and the sinking of three abandoned vessels playing the role of enemy ships." [16]

The combined task force commander for RIMPAC 2010 is commander of the U.S. Third Fleet, whose area of responsibility is approximately 50 million square miles of the eastern Pacific, Vice Admiral Richard Hunt, who stated, "This is the largest RIMPAC that we've had," and one which "clearly focuses on maritime domain awareness dealing with expanded military operations across the complete spectrum of warfare." [17]Time's Mark Thompson also wrote: "Closer to China, CARAT 2010 - for Cooperation Afloat Readiness and Training - just got underway [July 5] off Singapore. The operation involves 17,000 personnel and 73 ships from the U.S., Singapore, Bangladesh, Brunei, Cambodia, Indonesia, Malaysia, the Philippines and Thailand.

"China is absent from both exercises, and that's no oversight." [18]This February Cobra Gold 2010, "the largest multinational military exercise in the world," [19], was launched in Thailand (separated from China by only one nation, either Laos or Myanmar) and as with all previous Cobra Gold war games was run by U.S. Pacific Command and the Royal Thai Supreme Command. Joining the U.S. and Thailand in this year's exercises, designed "to build interoperability between the United States and its Asia-Pacific regional partners," [20] were the armed forces of Japan, Indonesia, Singapore and, for the first time, South Korea.

From June 8-25 the latest U.S. Air Force-led Red Flag Alaska air maneuvers were held near the eastern Pacific. "The Red Flag exercises, conducted in four-to-six cycles a year by the 414th Combat Training Squadron of the 57th Wing, are very realistic aerial war games. The purpose is to train pilots from the U.S., NATO and other allied countries for real combat situations." [21]Over a thousand airmen from five nations - the U.S., Japan, South Korea, Romania and Belgium - assembled at Alaska's Elmendorf and Eielson Air Force Bases for air combat training which "unites forces from all over the world.""South Korea, a country already accustomed to working with U.S. troops, is also in Alaska to strengthen the two nations' ties after the sinking of a South Korean warship by a North Korean submarine.

"'We have the American Air Force in Korea, and the coalition and the combined working environment is very important,' said Lt. Hoon Min Kim, a member of South Korea's air force. 'And being able to perform under a combined environment is therefore essential as well.'" [22]The incorporation of progressively more Asia-Pacific nations into what has been referred to as an Asian NATO is by no means directed solely at North Korea nor is it understood as such by officials in Beijing.

Participants in that arrangement, among them Australia, New Zealand, Singapore, South Korea and Mongolia, have troops serving under NATO in Afghanistan. Recently 140 new South Korean forces arrived at the Bagram Air Base in Afghanistan to reinforce a base in Parwan province recently subjected to repeated rocket attacks.

Seoul's troop strength in the war zone is now at 230.

This month the government of Singapore announced it will increase its soldiers in the NATO-led International Security Assistance Force to "a record 162, from 97 last year.""Next month, the Singapore Armed Forces (SAF) will send a 52-man unmanned aerial vehicle (UAV) team - its biggest deployment to Afghanistan - to Oruzgan [Uruzgan], one of two provinces where Singapore has troops." [23]Earlier this year NATO announced that Mongolia and South Korea have become the 45th and 46th nations to provide it with troops for the war in Afghanistan. Mongolia borders both China and Russia and is the object of intense efforts by the U.S. to increase military cooperation and integration. [24]

On July 6 NATO's Assistant Secretary General for Political Affairs and Security Policy Dirk Brengelmann paid a two-day visit to South Korea, where he stated, "Our security interests and security interests of countries like Korea coincide today more than ever."A news report of his visit paraphrased his comments as asserting that, "The world's biggest military alliance, NATO, is looking to increase cooperation with South Korea and other partners beyond Europe and North America," and added that "Speaking of cooperation, Brengelmann noted NATO's show of support for South Korea in light of the sinking of its warship Cheonan... The diplomat said some NATO members also serve on the U.N. Security Council and that the NATO members will try to ensure any Security Council action on the Cheonan sinking will represent their views expressed in the NATO statement." [25]Another country that shares borders with China and Russia, Kazakhstan, has allowed the U.S. and NATO transit and overflight rights for the Afghan war and last week the nation's president, Nursultan Nazarbayev, signed a law permitting the Pentagon to ship "special cargo" - armored vehicles - through his country.

The U.S. and NATO have transited hundreds of thousands of troops through the Manas Air Base (now Transit Center at Manas) in Kyrgyzstan, which also borders China, since 2001 and in recent months troops have passed in and out from Afghanistan at the rate of 55,000 a month, 660,000 a year. [26] Washington has announced plans to open new training bases in Kyrgyzstan and Tajikistan, the second nation also adjoining China.

With Afghanistan and Pakistan, which also have borders with China, the U.S. and NATO have a military presence in five nations on China's western flank and a foothold in Mongolia. The U.S. and NATO war in South Asia will enter its tenth year this autumn with no sign of Western military presence departing from China's backyard.

The U.S. military remains ensconced in Japan and South Korea, has returned to the Philippines (including camps in Mindanao), is solidifying bilateral and multilateral military relations with practically all nations in Southeast Asia, and for the past five years has cultivated India as a military partner. [India is currently an observer at the RIMPAC exercises.)

Japan, Taiwan and Australia are being integrated into a U.S.-designed regional and broader global interceptor missile system.

The U.S. is conducting regular military exercises, building military partnerships, stationing troops and opening bases around China's periphery, in addition to the positioning of warships, submarines and aircraft carriers in the waters off its coasts.

What alarms China most at the moment, though, is a proposed joint U.S.-South Korean military exercise in the Yellow Sea, enclosed by both Koreas to the east and China to the north and west.

China's Global Times recently quoted Xu Guangqian, military strategist at the People's Liberation Army's Academy of Military Sciences, issuing this warning: "China's position on the Yellow Sea issue demonstrates its resolution to safeguard national rights and interests. It also reflects that China is increasingly aware of the fact that its strategic space has confronted threats from other countries." [27]China, which just concluded six days of naval drills of its own in the East China Sea, had more reason to be concerned when it was disclosed earlier this month that a U.S. aircraft carrier would join the maneuvers off its Yellow Sea coast.

On July 8 China renewed its opposition to the planned U.S.-South Korean war games, with Foreign Ministry spokesman Qin Gang telling reporters, "China has expressed its serious concerns with relevant parties. We are firmly opposed to foreign military vessels engaging in activities that undermine China's security interests in the Yellow Sea or waters close to China." [28]An unsigned editorial in the Chinese Global Times of July 8 stated, "Beijing sees the joint exercise not only as being aimed at Pyongyang, but also as a direct threat to its territorial waters and coastline," and blamed South Korean President Lee Myung-bak for worsening relations between the two nations:"It is not known whether Lee had thought of China's reaction when he announced in May the drill with the US.

"Did he foresee Chinese people's anger? Or, did he intend to provoke the country on the other side of the Yellow Sea?

"It is a shame and a provocation on China's doorstep.

"If a US aircraft carrier enters the Yellow Sea, it will mean a major setback to Seoul's diplomacy, as hostility between the peoples of China and South Korea will probably escalate, which Beijing and Seoul have been working for years to avoid." [29]President Lee met with his American counterpart, Barack Obama, on the sidelines of the Group of Eight summit in Toronto late last month, during which a previous arrangement to transfer wartime command of South Korean forces to the nation in 2012 were postponed if not abandoned.

In Obama's words, "One of the topics that we discussed is that we have arrived at an agreement that the transition of operational control for alliance activities in the Korean peninsula will take place in 2015." In the five-year interim, "if war were to break out on the Korean peninsula the United States would assume operational command of South Korean forces." [30] If Washington is planning direct intervention on the Korean Peninsula as its military buildup in the region, including off China's shores, might indicate, the words of former South Korean president Kim Young-Sam a decade ago are worth recalling.

Two years after stepping down as head of state, Kim revealed to one of his nation's main newspapers that he had intervened to prevent a second Korean war, that his government, "stopped US President Bill Clinton from launching an air strike against North Korea's nuclear facilities in June 1994."He initiated a last-minute phone conversation with the U.S. president which, "saved the Korean peninsula from an imminent war," as "The Clinton government was preparing a war" by deploying an aircraft carrier off the eastern coast of North Korea "close enough for its war planes to hit the North's nuclear facilities in Yongbyon."Furthermore, Kim warned the U.S. ambassador in Seoul that, "another war on the Korean peninsula would turn all of Korea into a bloodbath, killing between 10 and 20 million people and destroying South Korea's prosperous economy." [31]Any catastrophic event on the Korean Peninsula, and war is the ultimate cataclysm, could lead to hundreds of thousands of North Korean refugees fleeing to Russia and millions to China.

The nearly nine-year war in Afghanistan being waged by the U.S. and NATO has led to an explosion of violence and destabilization in three nations flanking China: • Afghanistan itself• Pakistan • KyrgyzstanAlso, since 2001 Afghanistan has become the world's largest producer of opium and hashish, flooding the European and other drug markets. A forum entitled "Afghan Drug Production - A Challenge to the International Community" was held in Moscow a month ago.

A Russian report on the meeting stated, "The situation around drug production in Afghanistan has gained a catastrophic character. Some 100,000 people died globally from Afghan drugs in 2009 alone. In all, Afghan-made opiates have claimed one million human lives in the past decade, and 16 million more ruined their health." [32] 30,000 of the drug-related deaths occurred in Russia.

The United Nations estimates that Afghanistan currently accounts for 92 per cent of world opium cultivation.

China and Russia are viewed as, if not challengers to U.S. global dominance, impediments to its further consolidation. And not in the military sphere but in the fields of economics, trade, energy and transportation. Destabilization of their neighborhoods and frontiers is one manner of limiting competition.

All means fair and foul are employed to eliminate obstacles to uncontested supremacy, and what the world's sole military superpower (the term is President Obama's from his Nobel Peace Prize acceptance speech) truly excels at is expanding its international military machine with an unflinching willingness to use it.

Alexandria, Virgina — Malaysia, well, at least its northern state of Kelantan, is putting the Islamic gold dinar and silver dirham into circulation as legal tender and it could be implemented as early as mid-August. It won’t be the first nation using gold coins — Indonesia has already minted about 25,000 pieces for use in Australia, Malaysia, and Singapore — but, they are going to be useable in a rather comprehensive fashion.

According to The Guardian:

“If information on its website is to be believed, the council has the blessing of the state’s Islamist government, Parti Islam SeMalaysia (Pas), to kickstart the dinar in three moves. First, the state will pay a quarter of its public servants’ salaries using the dinar. Second, all state companies will accept dinar payments. Lastly, some 600 commercial enterprises will also embrace this currency.

“Inspired by selective religious sources and backed by historical precedents within the annals of Islamic history, the gold dinar system is touted by certain fiercely proud Muslims as the Islamic answer to thwart capitalism’s woes.

“The idea was first mooted by Malaysia’s former prime minister, Mahathir Mohamad, in the aftermath of the 1997 Asian financial crisis. He argued that the coins would never hang their possessor out to dry in the same way that paper money had. As precious metals with intrinsic value, gold and silver are more resistant to market fluctuations and devaluation compared to the US dollar – an argument he took to the Organisation of the Islamic Conference as a tool to battle western hegemony.”

In and of itself, choosing a gold-backed currency as a tool “to thwart capitalism’s woes” seems a bit wrongheaded. Its use could raise the ire of capitalist public accustomed to paper money, but there are many true-blue capitalists that would sing the praises of a gold-backed US dollar, for instance, given the opportunity. The concept of a gold-backed currency other than the dollar, in this case the dinar, could conceptually offer a threat to the dollar’s reserve currency resilience, but not without a global endorsement of its usefulness in international trade. Anything’s possible, but it seems unlikely even China, with its particular reserves quandary, is going to rush to support a Malaysian reserve currency anytime soon.

You can read more details about the gold dinar and silver dirham in The Guardian’s coverage of whether or not Malaysia’s Islamic currency will be able to thwart capitalism.

Best,

Rocky Vega,The Daily ReckoningAuthor Image for Rocky VegaRocky Vega

Rocky Vega is a regular contributor to The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.

On July 11, 2010, al-Malahim Media, the media arm of al Qaeda in the Arabian Peninsula (AQAP), published the first edition of its new English-language online magazine “Inspire.” The group had tried to release the magazine in late June, but for some reason — whether a technical glitch, virus (as rumored on some of the jihadist message boards) or cyberattack — most of the initial file released was unreadable.

The magazine was produced by someone who has a moderate amount of technological savvy, who speaks English well and who uses a lot of American idioms and phraseology. We did not note any hint of British or South Asian influence in the writing. A government source has suggested to us (and we have seen the claim repeated in the media) that Inspire was produced by a U.S citizen who was born in Saudi Arabia named Samir Khan. Khan is a well-known cyber-jihadist — indeed, The New York Times did an excellent story on Khan in October 2007. Given Khan’s background, history of publishing English-language jihadist material and the fact that he reportedly left the United States for Yemen in 2009 and has not returned, it does seem plausible that he is the driving force behind Inspire.

The magazine contains previously published material from Osama bin Laden, Ayman al-Zawahiri, Abu Musab al-Suri and Anwar al-Awlaki. While it also contains new material, this material, especially from al-Awlaki and AQAP leader Nasir al-Wahayshi (aka Abu Bashir), is consistent with their previously published statements. One of the messages by al-Awlaki featured in Inspire, “A Message to the American People,” was previously released to CNN and reissued by al-Malahim on the Internet July 19, almost as if to validate Inspire. Even though the way in which some of the material in Inspire is presented is quite elementary, and could lead some to believe the magazine might be a spoof, we have found no analytical reason to doubt its authenticity.

Presentation aside, the material is quite consistent with what we have seen released by al-Malahim Media in its Arabic-language materials over many months. When closely examined, the inaugural issue of Inspire provides a good gauge of AQAP’s thought and suggests the general direction of the broader jihadist movement.

Inspiration

In a letter from the editor appearing at the beginning of the magazine, the purpose of Inspire is clearly laid out: “This magazine is geared towards making the Muslim a mujahid.” The editor also clearly states that Inspire is an effort by al-Malahim Media to reach out to, radicalize and train the millions of English-speaking Muslims in the West, Africa, South Asia and Southeast Asia.

Inspire does not represent any sort of major breakthrough in jihadist communication. English-language jihadist material has been available on the Internet since the early 1990s on sites such as Azzam.com, and jihadists have released other magazines directly targeting English-speaking audiences. What is remarkable about Inspire is that it was released by al-Malahim and AQAP. Within the jihadist movement, AQAP has assumed the vanguard position on the physical battlefield over the past year with links to several attacks or attempted attacks in the West. AQAP has also been frequently mentioned in Western media over the past several months, and it appears that al-Malahim is trying to exploit that notoriety in order to get the attention of English-speaking Muslims.

Regarding AQAP’s links to recent attacks, Inspire follows the trend of AQAP publications and leaders in recent months in praising Fort Hood shooter Maj. Nidal Hasan and failed Christmas Day bomber Umar Farouk Abdulmutallab and lifting them up as examples for all jihadists to follow. “We call on every Muslim who feels any jealousy for their religious beliefs to expel the polytheists from the Arabian Peninsula, by killing all of the crusaders working in embassies or otherwise, and to declare war against the crusaders in the land of the Prophet Muhammad — peace be upon him — on the ground, sea and air. And we call on every soldier working in the crusader armies and puppet governments to repent to Allah and follow the example of the heroic mujahid brother Nidal Hassan [sic]; to stand up and kill all the crusaders by all means available to him.…”

In the article discussing Abdulmutallab, the author again brags about the manufacturing of the improvised explosive device used in the Christmas Day attack even though that device, like the one used in the assassination attempt against Saudi Deputy Interior Minister Prince Mohammed bin Nayef, failed to achieve the objective. “The mujahidin brothers in the manufacturing department managed with the grace of Allah to make an advanced bomb. The bomb had been tested and proven effective as it has passed through the detector ports. The martyrdom bomber managed with the grace of Allah to reach his target, but due to a technical glitch, the bomb did not explode completely; and we will continue on our path until we get what we want….” This statement would seem to indicate that if AQAP is able to recruit a willing suicide bomber who is able to travel to the West, they will again attempt to attack an airliner using a similar device.

Airliners remain vulnerable to such attacks. STRATFOR has previously noted when discussing AQAP and its innovative IED designs, there are many ways to smuggle IED components on board an aircraft if a person has a little imagination and access to explosives. As we wrote in September 2009, three months before the Christmas Day bomber’s attempted attack, efforts to improve technical methods to locate IED components must not be abandoned, but the existing vulnerabilities in airport screening systems demonstrate that an emphasis needs to be placed not only on finding the bomb but also on finding the bomber.

Throughout the magazine, articles criticize the U.S. operations in Afghanistan, Iraq and Yemen; Saudi operations against jihadists; the burqa ban in Europe and even global warming — Inspire carried a reproduction of a statement purportedly authored by Osama bin Laden earlier this year titled “The Way to Save the Earth” that criticizes U.S. policy regarding climate change and calls for economic jihad against the United States.

The magazine also contained a portion of a previously-released message titled “From Kabul to Mogadishu” by al Qaeda second-in-command Ayman al-Zawahiri that encouraged the people of Yemen to join al Qaeda in its global struggle. It only quoted a part of the original message that pertained to Yemen and omitted portions that pertained to other locations.

AQAP Revealed

In addition to the recycled content from al Qaeda’s core leadership, Inspire also contains quite a bit of new and interesting content from AQAP’s military and theological leaders. An interview with AQAP leader Nasir al-Wahayshi provided al-Wahayshi the opportunity to reinforce several points he has been making for months now regarding his call for jihadists to conduct simple attacks using readily available weapons. “My advice to my Muslim brothers in the West is to acquire weapons and learn methods of war. They are living in a place where they can cause great harm to the enemy and where they can support the Messenger of Allah.” Al-Wahayshi continued “…a man with his knife, a man with his gun, a man with his rifle, a man with his bomb, by learning how to design explosive devices, by burning down forests and buildings, or by running over them with your cars and trucks. The means of harming them are many so seek assistance from Allah and do not be weak and you will find a way.”

This call was echoed by Adam Gadahn in March 2010 when the American-born spokesman for al Qaeda prime advised jihadists to strike targets that were close to them with simple assaults and urged his audience to not “wait for tomorrow to do what can be done today, and don’t wait for others to do what you can do yourself.”

These calls are part of a move toward a leaderless resistance model of jihadism that has accompanied the devolution of the jihadist threat from one based on al Qaeda the group to a broader threat based primarily on al Qaeda franchises and the wider jihadist movement. (STRATFOR is currently putting the finishing touches on a book that details our coverage of this devolutionary process since 2004.) With this shift, more attacks such as the Times Square bombing attempt, the Fort Hood shooting and the June 1, 2009, Little Rock shootings can be anticipated.

In an effort to provide training in terrorist tradecraft to such grassroots and lone-wolf jihadists, Inspire contains a section called “Open Source Jihad,” which is the term that AQAP uses to refer to leaderless resistance. This section is intended to serve as “a resource manual for those who loathe tyrants.” The material is intended to allow “Muslims to train at home instead of risking a dangerous travel abroad,” and one part exclaims, “Look no further, the open source jihad is now at hand’s reach.” The section also contains a lengthy step-by-step guide to constructing simple pipe bombs with electronic timers, bearing the rhymed title “Make a Bomb in the Kitchen of Your Mom.” The images of New York City contained in this section serve as a reminder of the importance New York holds in jihadist thought as a target. Such rudimentary improvised explosive devices are unlikely to cause mass casualties, but like the pipe bombs employed by Eric Rudolph, they could prove deadly on a small scale if they are employed effectively.

When considering this concept of leaderless resistance and of using publications like Inspire to train aspiring jihadists, it is important to remember that this type of instruction has only a limited effectiveness and that there are many elements of terrorist tradecraft that cannot be learned by merely reading about them. In other words, while the jihadist threat may be broadening in one way, it is also becoming less severe, because it is increasingly emanating from actors who do not possess the skill of professional terrorist operatives and who lack the ability to conduct complex and spectacular attacks.

Cartoon Controversy

One of the other features in Inspire is an article by Anwar al-Awlaki, the American-born Yemeni cleric who has been linked to Nidal Hasan, Umar Farouk Abdulmutallab, Faisal Shahzad and two of the 9/11 hijackers. In his article, titled “May Our Souls be Sacrificed for You,” al-Awlaki focuses on the controversy that arose over the cartoons of the Prophet Mohammed that first appeared in 2005. Although the cartoons were published nearly five years ago, the jihadists have not allowed the issue to die down. To date, the jihadist response to the cartoons has resulted in riots, arsons, deaths, the 2008 bombing of the Danish Embassy in Islamabad and an attack in January 2010 in which a man armed with an axe and knife broke into the home of Jyllands-Posten newspaper cartoonist Kurt Westergaard in Denmark and allegedly tried to kill him. The Kashmiri militant group Harkat-ul-Jihad e-Islami (HUJI) also dispatched American operative David Headley to Denmark on two occasions to plan attacks against Jyllands-Posten and Westergaard in what HUJI called “Operation Mickey Mouse.”

In his Inspire article, al-Awlaki states, “If you have the right to slander the Messenger of Allah, we have the right to defend him. If it is part of your freedom of speech to defame Muhammad it is part of our religion to fight you.” Al-Awlaki continues: “This effort, the effort of defending the Messenger of Allah, should not be limited to a particular group of Muslims such as the mujahidin but should be the effort of the ummah, the entire ummah.” He also referred to a 2008 lecture he gave regarding the cartoon issue titled “The Dust Will Never Settle Down” and notes that, “Today, two years later, the dust still hasn’t settled down. In fact the dust cloud is only getting bigger.” He adds that “Assassinations, bombings, and acts of arson are all legitimate forms of revenge against a system that relishes the sacrilege of Islam in the name of freedom.”

Inspire also features a “hit list” that includes the names of people like Westergaard who were involved in the cartoon controversy as well as other targets such as Dutch politician Geert Wilders, who produced the controversial film Fitna in 2008; Ayaan Hirsi Ali, who wrote the screenplay for the movie Submission (filmmaker Theo Van Gogh, the director of Submission, was murdered by a jihadist in November 2004); and Salman Rushdie, author of the book The Satanic Verses. Most of these individuals have appeared on previous jihadist hit lists. A new notable addition was American cartoonist Molly Norris, who was added due to her idea to have a day where “everybody draws Mohammed.” Norris made her suggestion in response to threats against the irreverent animated television program South Park by Muslims over a brief scene in an episode that lampooned the Prophet. Comedy Central censored the South Park episode featuring Mohammed because of the threats, provoking Norris’s suggestion.

Al-Awlaki and AQAP appear to believe they can use the anger over the Mohammed cartoons to help them inspire Muslims to conduct attacks. In this edition of Inspire, they are clearly attempting to fan the flames to ensure that the dust will not settle down. They are also seeking to train these radicalized individuals to kill people, although, as we note above, that is a difficult task to do remotely over the Internet.

One other thing the magazine seeks to accomplish is to help make the jihadist training experience better for English speakers who seek to travel to jihadist training camps abroad. There have been anecdotal reports of Westerners who have traveled to get training and who have not had positive experiences during the process — and of at least one Somali-American who was executed after expressing his desire to leave an al Shabaab training camp and return home. In light of this problem, AQAP includes an article in Inspire titled “What to Expect in Jihad” and designed to reduce the “confusion, shock and depression” that can be experienced by trainees at such camps. The article also provides a list of things to bring to the training camp, including a friend to help ease the loneliness, and recommends that aspiring jihadists learn the local language.

The time and effort that AQAP put into this first issue of Inspire, and the support the magazine apparently receives from important AQAP figures such as al-Wahayshi and al-Awlaki, are strong indicators of the group’s intent to support leaderless resistance as a way to attack the West, something AQAP has had some difficulty doing itself.

About Me

ROLAND SAN JUAN was a researcher, management consultant, inventor, a part time radio broadcaster and a publishing director. He died last November 25, 2008 after suffering a stroke. His staff will continue his unfinished work to inform the world of the untold truths. Please read Erick San Juan's articles at: ericksanjuan.blogspot.com This blog is dedicated to the late Max Soliven, a FILIPINO PATRIOT.
DISCLAIMER - We do not own or claim any rights to the articles presented in this blog. They are for information and reference only for whatever it's worth. They are copyrighted to their rightful owners.
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